<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. _____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Core Materials Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
CORE MATERIALS CORPORATION
800 Manor Park Drive
Columbus, Ohio 43228
(614) 870-5000
April 22, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Core Materials Corporation to be held at the Holiday Inn Columbus-West, 2350
Westbelt Drive, Columbus, Ohio 43228, on May 18, 1999, at 9:00 a.m., Eastern
Standard time. Further information about the meeting and the matters to be
considered is contained in the formal Notice of Annual Meeting of Stockholders
and Proxy Statement on the following pages.
It is important that your shares be represented at this meeting. Whether or
not you plan to attend, we hope that you will sign, date and return your proxy
promptly in the enclosed envelope.
Sincerely,
Malcolm M. Prine
Chairman of the Board
<PAGE> 3
CORE MATERIALS CORPORATION
800 MANOR PARK DRIVE
COLUMBUS, OHIO 43228
(614) 870-5000
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1999
------------------
TO OUR STOCKHOLDERS:
Core Materials Corporation ("Core Materials") will hold its 1999 Annual
Meeting of Stockholders on May 18, 1999 at 9:00 a.m., Eastern Standard time, at
the Holiday Inn Columbus-West, 2350 Westbelt Drive, Columbus, Ohio 43228, for
the following purposes:
(1) to elect five (5) directors to comprise the Board of Directors of Core
Materials, each to serve a one-year term expiring at the 2000 annual
meeting of stockholders;
(2) to ratify the appointment of Deloitte & Touche LLP as auditors for Core
Materials for the year ending December 31, 1999; and
(3) to consider and act upon other business as may properly come before the
meeting and any adjournments or postponements of the meeting.
The foregoing matters are described in more detail in the Proxy Statement
which is attached to this notice. Only stockholders of record at the close of
business on April 2, 1999, the record date, are entitled to receive notice of
and to vote at the meeting.
Management desires to have maximum representation at the meeting and
respectfully requests that you date, execute and promptly mail the enclosed
proxy in the postage-paid envelope provided. You may revoke a proxy by notice in
writing to the Secretary of Core Materials at any time prior to its use.
BY ORDER OF THE BOARD OF DIRECTORS
Kevin L. Barnett
Vice President, Secretary, Treasurer &
Chief Financial Officer
Dated: April 22, 1999
<PAGE> 4
CORE MATERIALS CORPORATION
800 MANOR PARK DRIVE
COLUMBUS, OHIO 43228
(614) 870-5000
------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1999
------------------
To Our Stockholders:
Core Materials Corporation ("Core Materials") is furnishing this Proxy
Statement in connection with the solicitation by its Board of Directors of
proxies to be used and voted at its annual meeting of stockholders, and at any
adjournment of the annual meeting. Core Materials will hold its annual meeting
on May 18, 1999, at the Holiday Inn Columbus-West, 2350 Westbelt Drive,
Columbus, Ohio 43228 at 9:00 a.m. Eastern Standard time. Core Materials is
holding the annual meeting for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders.
Core Materials is first sending this Proxy Statement, the accompanying
proxy card and the Notice of Annual Meeting of Stockholders on April 22, 1999.
GENERAL INFORMATION
SOLICITATION
The Board of Directors of Core Materials is soliciting the enclosed proxy.
In addition to the use of the mail, directors and officers of Core Materials may
solicit proxies, personally or by telephone or telegraph. Core Materials will
not pay its directors and officers any additional compensation for the
solicitation.
In addition, the stock transfer agent of Core Materials, American Stock
Transfer & Trust Co., New York, New York will conduct proxy solicitations on
behalf of Core Materials. Core Materials will reimburse American Stock Transfer
& Trust Co. for reasonable expenses incurred by it in the solicitation. Core
Materials also will make arrangements with brokerage firms and other custodians,
nominees and fiduciaries for the forwarding of proxy solicitation material to
beneficial owners of the common stock of Core Materials. Core Materials will
reimburse those brokerage firms, custodians, nominees and fiduciaries for their
reasonable expenses.
Core Materials will pay all expenses of the proxy solicitation. Core
Materials will not use specially engaged employees or other paid solicitors to
conduct any proxy solicitation.
VOTING RIGHTS AND VOTES REQUIRED
Holders of shares of the common stock of Core Materials at the close of
business on April 2, 1999, the record date for the annual meeting, are entitled
to notice of, and to vote at, the annual meeting. On the record date, Core
Materials had 9,778,680 shares of common stock outstanding.
Each outstanding share of common stock on the record date is entitled to
one vote on all matters presented at the annual meeting. The presence, in person
or by proxy, of stockholders entitled to cast a majority of all the votes
entitled to be cast will constitute a quorum for the transaction of business at
the annual meeting. No business, other than adjournment, can be conducted at the
annual meeting unless a quorum is present in person or by proxy.
Abstentions will count as shares present in determining the presence of a
quorum for a particular matter. Abstentions, however, will not count as votes
cast in determining the approval of any matter by the stockholders. If a broker
or other record holder or nominee indicates on a proxy that it does not have
authority to vote certain shares on a particular matter or if a broker or other
record holder or nominee does not return proxies for any shares, those shares
will not count as either present for purposes of determining a quorum or as
votes cast in determining the approval of any matter by the stockholders.
<PAGE> 5
In the election of directors, each of the five directors will be elected by
a plurality of votes cast by stockholders of record on the record date and
present at the annual meeting, in person or by proxy. Cumulative voting in the
election of directors will not be permitted. Core Materials is seeking
stockholder ratification of the appointment of independent auditors of Core
Materials, but ratification is not required by law.
VOTING OF PROXIES
Shares of common stock represented by all properly executed proxies
received prior to the annual meeting will be voted in accordance with the
choices specified in the proxy. Unless contrary instructions are indicated on
the proxy, the shares will be voted:
- FOR the election as directors of the nominees named in this Proxy
Statement; and
- FOR the ratification of the appointment of Deloitte & Touche LLP, as the
auditors for Core Materials for the year ending December 31, 1999.
Management of Core Materials and the Board of Directors of Core Materials
know of no matters to be brought before the annual meeting other than as set
forth in this Proxy Statement. If, however, any other matter is properly
presented to the stockholders for action, it is the intention of the holders of
the proxies to vote at their discretion on all matters on which the shares of
common stock represented by proxies are entitled to vote.
REVOCABILITY OF PROXY
A stockholder who signs and returns a proxy in the accompanying form may
revoke it at any time before the authority granted by the proxy is exercised. A
stockholder may revoke a proxy by delivering a written statement to the
Secretary of Core Materials that the proxy is revoked.
ANNUAL REPORT
The Annual Report to Stockholders of Core Materials, which includes
financial statements and information concerning the operations of Core Materials
during the year ended December 31, 1998, accompanies this Proxy Statement.
Core Materials will provide, without charge, a copy of its Annual Report on
Form 10-K for the year ended December 31, 1998, upon the written request of any
person solicited, delivered to:
Core Materials Corporation
Attn: Kevin L. Barnett, Vice President, Secretary,
Treasurer and Chief Financial Officer
800 Manor Park Drive
P.O. Box 28183
Columbus, Ohio 43228
STOCKHOLDER PROPOSALS
Any stockholder who desires to present a proposal for consideration at the
2000 annual meeting of stockholders must submit the proposal in writing to Core
Materials. If the proposal is received by Core Materials prior to the close of
business on December 24, 1999, and otherwise meets the requirements of
applicable state and federal law, Core Materials will include the proposal in
the proxy statement and form of proxy relating to the 2000 annual meeting of
stockholders. Core Materials may confer on the proxies for the 2000 annual
meeting of stockholders discretionary authority to vote on any proposal, if Core
Materials does not receive notice of the proposal by March 8, 2000.
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<PAGE> 6
OWNERSHIP OF COMMON STOCK
BENEFICIAL OWNERS
The table below sets forth, to the knowledge of Core Materials, the only
beneficial owner, as of April 2, 1999, of more than 5% of the outstanding shares
of common stock of Core Materials.
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ---------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Navistar International Transportation Corp.......... 4,264,000(1) 43.6%
455 North Cityfront Plaza Drive
Chicago, Illinois 60611
</TABLE>
- ---------------
(1) Navistar International Transportation Corp. received these shares of common
stock on December 31, 1996, pursuant to the terms of an asset purchase
agreement which provided for the acquisition by Core Materials of the
Columbus Plastics operating unit of Navistar International Transportation
Corp. The terms and conditions of the asset purchase agreement are discussed
in greater detail below under the heading "Certain Relationships and Related
Transactions." Navistar International Transportation Corp. is a wholly-owned
subsidiary of Navistar International Corporation.
MANAGEMENT
The table below sets forth, as of April 2, 1999, the number of shares of
common stock beneficially owned by each director of Core Materials, by each
nominee for election as director of Core Materials, by each executive officer
named in the Summary Compensation Table contained in this Proxy Statement, and
by all of the foregoing directors, nominees and executive officers as a group.
The information concerning the persons set forth below was furnished in part by
each of those persons.
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ---------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Kevin L. Barnett.................................... 20,178(1) *
James F. Crowley.................................... 13,500(2) *
Ralph O. Hellmold................................... 75,000(3) *
Thomas M. Hough..................................... 14,000(4) *
Stephen J. Klestinec................................ 5,000(5) *
Malcolm M. Prine.................................... 95,011(6) *
Kenneth M. Schmell.................................. 23,000(7) *
James L. Simonton................................... 7,000(8) *
Gerald L. Voirol.................................... 7,500(9) *
All directors, nominees and executive officers as a
group (9 persons)................................. 260,189 2.6%
</TABLE>
- ---------------
* Less than 1% of the outstanding shares of common stock.
(1) Includes (1) 19,000 shares of common stock which Mr. Barnett has the right
to acquire within 60 days through the exercise of stock options; (2) 1,000
shares of common stock as to which Mr. Barnett has sole voting and
investment power; and (3) 178 shares of common stock held by Mr. Barnett in
the Core Materials Corporation Employee Stock Purchase Plan.
(2) Includes (1) 7,000 shares of common stock which Mr. Crowley has the right to
acquire within 60 days through the exercise of stock options; (2) 5,500
shares of common stock as to which Mr. Crowley has sole voting and
3
<PAGE> 7
investment power; and (3) 1,000 shares of common stock as to which Mr.
Crowley shares voting and investment power with his wife.
(3) Includes (1) 14,000 shares of common stock which Mr. Hellmold has the right
to acquire within 60 days through the exercise of stock options; and (2)
61,000 shares of common stock as to which Mr. Hellmold has sole voting and
investment power.
(4) Includes 14,000 shares of common stock which Mr. Hough has the right to
acquire within 60 days through the exercise of stock options.
(5) Includes 5,000 shares of common stock as to which Mr. Klestinec has sole
voting and investment power.
(6) Includes: (1) 28,000 shares of common stock which Mr. Prine has the right to
acquire within 60 days through the exercise of stock options; (2) 1,011
shares of common stock held by Mr. Prine's wife; (3) 5,000 shares of common
stock held by Mr. Prine's daughter; and (4) 61,000 shares of common stock as
to which Mr. Prine has sole voting and investment power.
(7) Includes 23,000 shares of common stock which Mr. Schmell has the right to
acquire within 60 days through the exercise of stock options.
(8) Includes 7,000 shares of common stock which Mr. Simonton has the right to
acquire within 60 days through the exercise of stock options.
(9) Includes 7,500 shares of common stock which Mr. Voirol has the right to
acquire within 60 days through the exercise of stock options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the following persons to file initial statements of beneficial ownership on a
Form 3 and changes of beneficial ownership on a Form 4 or Form 5 with the
Securities and Exchange Commission and to provide Core Materials with a copy of
those statements:
- executive officers and directors of Core Materials; and
- persons who beneficially own more than 10% of the issued and outstanding
shares of common stock of Core Materials.
Except as set forth in the following paragraph, Core Materials believes
that its executive officers, directors and greater than 10% beneficial owners
complied with all applicable section 16(a) filing requirements for the fiscal
year ended December 31, 1998. Core Materials has based this belief solely on a
review of the Section 16(a) statements furnished to it and written
representations from its executive officers and directors.
Each of James F. Crowley, Stephen J. Klestinec and James L. Simonton were
required to file an initial statement of beneficial ownership on a Form 3 by
June 8, 1998. Mr. Crowley, Mr. Klestinec and Mr. Simonton each filed a Form 3 on
June 5, 1998, but the Securities and Exchange Commission returned the forms for
illegibility. Accordingly, the forms subsequently were refiled and accepted by
the Securities and Exchange Commission on June 15, 1998. Mr. Crowley's Form 3
reported the ownership of 6,500 shares and the grant of a stock option for
35,000 shares. Mr. Klestinec's Form 3 reported the ownership of 1,000 shares and
the grant of a stock option for 100,000 shares. Mr. Simonton's Form 3 reported
the grant of a stock option for 35,000 shares. Mr. Klestinec also purchased
2,000 shares of common stock on October 30, 1998. Mr. Klestinec should have
reported the purchase on a Form 4 by November 10, 1998. Mr. Klestinec filed the
Form 4 on November 18, 1998.
4
<PAGE> 8
DIRECTORS AND EXECUTIVE OFFICERS OF CORE MATERIALS
The following biographies provide information on the background and
experience of the persons nominated to become directors at the annual meeting
and the executive officers of Core Materials. Core Materials is not aware of any
family relationships among any of the following persons or any arrangements or
understandings pursuant to which those persons have been, or are to be, selected
as a director or executive officer of Core Materials, other than arrangements or
understandings with directors or executive officers acting solely in their
capacity as directors or executive officers. Executive officers of Core
Materials are elected to serve for a term of one year or until their successors
have been duly elected and qualified.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) CURRENTLY HELD
- --------------------------------- ----- ---------------------------------
<S> <C> <C>
Kevin L. Barnett................. 36 Vice President, Secretary,
Treasurer and Chief Financial
Officer
James F. Crowley................. 52 Director
Ralph O. Hellmold................ 58 Director
Thomas M. Hough.................. 53 Director
Stephen J. Klestinec............. 49 Vice President, Sales and
Marketing
Malcolm M. Prine................. 70 Chairman of the Board of
Directors
Kenneth M. Schmell............... 50 Executive Vice President and
Chief Operating Officer
James L. Simonton................ 58 Director
Gerald L. Voirol................. 47 Controller and Assistant
Secretary
</TABLE>
Kevin L. Barnett. Kevin L. Barnett joined Core Materials as an employee on
April 1, 1997 and was elected Vice President, Secretary, Treasurer and Chief
Financial Officer on April 24, 1997. Mr. Barnett joined Core Materials after
approximately five years of working with Medex Inc., a publicly held
manufacturer and marketer of injection molded products used for medical and
surgical applications. Mr. Barnett served as Vice President, Treasurer, and
Corporate Controller of Medex Inc. from October, 1995 to January, 1997. He
served as Vice President and Corporate Controller of Medex Inc. from May, 1994
to October, 1995 and as Assistant Treasurer from April, 1992 to May, 1994. Prior
to joining Medex Inc., Mr. Barnett served as a certified public accountant with
Deloitte & Touche LLP from August, 1984 to April, 1992.
James F. Crowley. James F. Crowley has served as a director of Core
Materials since May 28, 1998. Mr. Crowley is currently the President of
Brookside Capital Incorporated, a private investment and advisory firm
head-quartered in New York, which he founded in 1993. From 1984 to 1992, Mr.
Crowley served in various capacities with Prudential Securities, Inc. including
President of Global Investment & Merchant Banking. Prior to joining Prudential
Securities, Inc., Mr. Crowley provided financial advisory, merger, acquisition
and underwriting services as a First Vice President and Partner at Smith Barney,
Harris Upham & Co. in its Investment Bank and Capital Markets Division. Mr.
Crowley graduated from the Wharton School at the University of Pennsylvania in
1976.
Ralph O. Hellmold. Ralph O. Hellmold has served as a director of Core
Materials since December 31, 1996. He is the founder and President of Hellmold
Associates, Inc., an investment banking boutique which specializes in mergers,
acquisitions and working with troubled companies or their creditors and acts as
general partner of hedge funds which invest primarily in securities of
financially distressed companies. Mr. Hellmold is also a director of
International Aircraft Investors located in Torrance, California and an
independent trustee of Ridgewood Electric Power Trusts II and III, Delaware
business trusts. Prior to forming Hellmold Associates in 1990, Mr. Hellmold was
a Managing Director at Prudential-Bache Capital Funding, where he served as
co-head of the Corporate Finance Group, co-head of the Investment Banking
Committee and head of the Financial Restructuring Group. From 1974 until 1987,
Mr. Hellmold was a partner at Lehman Brothers and its successors, where he
worked in Corporate Finance and co-founded the Financial Restructuring Group.
Thomas M. Hough. Thomas M. Hough has served as a director of Core
Materials since December 31, 1996. He has served as the Vice President and
Treasurer of Navistar International Corporation and its principal operating
subsidiary, Navistar International Transportation Corp. since October 1992.
Navistar International
5
<PAGE> 9
Transportation Corp. is a 44% stockholder and a significant customer of Core
Materials. The relationship of Navistar International Transportation Corp. to
Core Materials is described below under "Certain Relationships and Related
Transactions." Previously, Mr. Hough served as Assistant Treasurer and Assistant
Controller of Navistar International Transportation Corp. and as Controller of
Navistar Financial Corporation, a principal financial subsidiary of Navistar
International Transportation Corp. Mr. Hough joined Navistar International
Transportation Corp. in 1980, after twelve years with Deloitte & Touche LLP. Mr.
Hough also serves as a member of the Professional Advisory Board of the
Department of Accounting at the University of Illinois at Chicago.
Stephen J. Klestinec. Stephen J. Klestinec joined Core Materials as an
employee on April 1, 1998 and was elected to the position of Vice President,
Sales and Marketing on May 28, 1998. Mr. Klestinec was employed by Atlanta based
Georgia-Pacific Resin, Inc., a manufacturer of thermoset resins, from 1981 until
joining Core Materials on April 1, 1998. At Georgia-Pacific, Mr. Klestinec
served as market manager of fiber reinforced products. In such capacity, Mr.
Klestinec commercialized products for both the North American and International
markets in the aerospace, mass transit, electrical and electronic industries.
Mr. Klestinec also managed the abrasives, adhesives and specialty market
segment. Mr. Klestinec also held positions at Georgia-Pacific in market
development, quality assurance and manufacturing. Prior to joining
Georgia-Pacific, Mr. Klestinec served as plant manager for Pacific Resins and
Chemicals. Mr. Klestinec holds a bachelor's degree in Chemistry from Belmont
Abby College in Belmont, North Carolina.
Malcolm M. Prine. Malcolm M. Prine has served as a director of Core
Materials and Chairman of Core Materials since December 31, 1996. Mr. Prine also
served as a director of RYMAC Mortgage Investment Corporation from May 1992 to
December 31, 1996. RYMAC merged with Core Materials on December 31, 1996, as
described below under "Certain Relationships and Related Transactions." Mr.
Prine has been self-employed while acting as a consultant for the last nine
years. He is currently a director of Equitable Resources, a natural gas utility
company, and PA Capital Bank, a Pennsylvania commercial bank serving small
businesses and individuals. He also serves on the board of various private
organizations and universities.
Kenneth M. Schmell. Kenneth M. Schmell has served as Executive Vice
President and Chief Operating Officer of Core Materials since May 28, 1998. From
December 31, 1996 to May 28, 1998, Mr. Schmell served Core Materials as General
Manager and Acting Chief Executive Officer. Prior to joining Core Materials, Mr.
Schmell served Navistar International Transportation Corp. in various capacities
for approximately eight years, including service as Plant Manager of the
Columbus Plastics operation of Navistar International Transportation Corp.
Navistar International Transportation Corp. is a 44% stockholder and a
significant customer of Core Materials. The relationship of Navistar
International Transportation Corp. to Core Materials is described below under
"Certain Relationships and Related Transactions."
James L. Simonton. James L. Simonton has served as a director of Core
Materials since May 28, 1998. Mr. Simonton is currently the Vice President of
Purchasing and Supplier Development for Navistar International Transportation
Corp. and has served in that capacity since 1992. In such capacity, Mr. Simonton
is in charge of purchasing of all production materials, in-bound and out-bound
freight and logistics and the development of suppliers. Navistar International
Transportation Corp. is a 44% stockholder and a significant customer of Core
Materials. The relationship of Navistar International Transportation Corp. to
Core Materials is described below under "Certain Relationships and Related
Transactions."
Gerald L. Voirol. Gerald L. Voirol is the Controller and Assistant
Secretary for Core Materials and has served in those capacities since December
31, 1996. Mr. Voirol was employed by Navistar International Transportation Corp.
from 1973 until joining Core Materials in 1996. Mr. Voirol served as Controller
of the Columbus Plastics operating unit of Navistar International Transportation
Corp. from 1991 until 1996. Navistar International Transportation Corp. is a 44%
stockholder and a significant customer of Core Materials. The relationship of
Navistar International Transportation Corp. to Core Materials is described below
under "Certain Relationship and Related Transactions."
6
<PAGE> 10
COMPENSATION, MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
For the fiscal year ended December 31, 1998, the directors of Core
Materials received a director's fee of $3,000 per quarter. Core Materials
anticipates that the compensation arrangement for the fiscal year ending
December 31, 1999 will remain the same. In addition, the Core Materials
Corporation Long-Term Equity Incentive Plan provides for a one-time grant of a
director option to each of the non-employee directors of Core Materials to
purchase 35,000 shares of common stock, which option vests in increments of 20%
over a five year period. Mr. Hellmold, Mr. Hough and Mr. Prine received this
one-time grant of a director option during the fiscal year ended December 31,
1997. Mr. Simonton and Mr. Crowley received this one-time grant of a director
option upon their election to the Board of Directors on May 28, 1998. Core
Materials also has entered into certain compensation arrangements with members
of its Board of Directors. These compensation arrangements are discussed below
under the heading "Compensation Committee Interlocks and Insider Participation."
The Board of Directors met four times during the fiscal year ended December
31, 1998. During that period, each of the directors attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings of all committees of the Board of Directors on which
each director served.
Core Materials did not have a Compensation Committee during the fiscal year
ended December 31, 1998. The entire Board of Directors performed the functions
of a Compensation Committee during that period, including recommending the form
and amount of compensation to be paid to the executive officers and directors of
Core Materials.
Core Materials has an Audit Committee which currently consists of Messrs.
Hough, Crowley and Hellmold. The principal function of the Audit Committee is to
review and approve the scope of the annual audit undertaken by the independent
certified public accountants of Core Materials and to meet with them to review
and inquire as to audit functions and other financial matters and to review the
year-end audited financial statements. The Audit Committee met two times during
the fiscal year ended December 31, 1998.
Core Materials has a Nominating Committee which currently consists of
Messrs. Hellmold, Hough and Prine. The principal function of the Nominating
Committee is to recommend candidates for membership on the Board of Directors.
The Nominating Committee met one time during the fiscal year ended December 31,
1998.
STOCKHOLDER NOMINATIONS
The bylaws of Core Materials set forth procedural requirements pursuant to
which stockholders may make nominations to the Board of Directors. The Board of
Directors or the Nominating Committee may not accept recommendations for
nominations to the Board of Directors in contravention of these procedural
requirements.
In order for a stockholder to nominate a person for election to the Board
of Directors, the stockholder must give written notice of the stockholder's
intent to make the nomination either by personal delivery or by United States
mail, postage prepaid, to the Secretary of Core Materials not less than fifty
nor more than seventy-five days prior to the meeting at which directors will be
elected. In the event that less than sixty days prior notice or prior public
disclosure of the date of the meeting is given or made to stockholders, Core
Materials must receive notice not later than the close of business on the tenth
day following the day on which notice of the date of the meeting was mailed or
public disclosure was made, whichever occurred first.
The notice must set forth:
- the name and address of record of the stockholder who intends to make the
nomination;
- a representation that the stockholder is a holder of record of shares of
the capital stock of Core Materials entitled to vote at the meeting and
intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice;
- the name, age, business and residence addresses and principal occupation
or employment of each proposed nominee;
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<PAGE> 11
- a description of all arrangements or understandings between the
stockholder and each proposed nominee and any other person or persons,
naming such person or persons, pursuant to which the nomination or
nominations are to be made by the stockholder;
- other information regarding each proposed nominee as would be required to
be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission; and
- the written consent of each proposed nominee to serve as a director of
Core Materials if elected.
Core Materials may require any proposed nominee to furnish other
information as it may reasonably require to determine the eligibility of the
proposed nominee to serve as a director. The presiding officer of the meeting of
stockholders may, if the facts warrant, determine that a stockholder did not
make a nomination in accordance with the foregoing procedure. If the presiding
officer makes such a determination, the officer shall declare such determination
at the meeting and the defective nomination will be disregarded.
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<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth compensation information for Kenneth M.
Schmell, Kevin L. Barnett, Stephen J. Klestinec and Gerald L. Voirol.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG TERM COMPENSATION
---------------- -------------------------------------------
NAME AND SALARY BONUS AWARDS-SECURITIES ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) UNDERLYING OPTIONS(#) COMPENSATION($)(4)
- --------------------------------- ---- ------- ------ ---------------------- ------------------
<S> <C> <C> <C> <C> <C>
Kenneth M. Schmell(1)............ 1998 127,500 62,459 -- 10,200
Executive Vice President and 1997 115,725 76,969 125,000 8,413
Chief Operating Officer
Kevin L. Barnett(2).............. 1998 117,500 45,229 -- 7,453
Vice President, Secretary,
Treasurer, 1997 86,250 51,312 100,000 4,169
and Chief Financial Officer
Stephen J. Klestinec(3).......... 1998 86,250 45,229 200,000 48,316
Vice President Sales and
Marketing
Gerald L. Voirol(1).............. 1998 80,804 21,538 -- 6,858
Controller and Assistant
Secretary 1997 78,650 26,239 40,000 5,702
</TABLE>
- ---------------
(1) Messrs. Schmell and Voirol assumed their positions with Core Materials as of
the close of business on December 31, 1996. Accordingly, compensation
information is not provided for periods prior to the fiscal year ended
December 31, 1997.
(2) Core Materials employed Mr. Barnett on April 1, 1997. Accordingly,
compensation information is not provided for Mr. Barnett for periods prior
to the fiscal year ended December 31, 1997. Mr. Barnett's annual salary for
1997 was $115,000.
(3) Core Materials employed Mr. Klestinec on April 1, 1998. Accordingly,
compensation information is not provided for Mr. Klestinec for periods prior
to the fiscal year ended December 31, 1998. Mr. Klestinec's annual salary
for 1998 was 115,000. Mr. Klestinec also received a signing bonus upon his
acceptance of employment with Core Materials of $20,000 and he received
$22,422 as reimbursement for his expenses to move to Columbus, Ohio. These
amounts are included in "All Other Compensation."
(4) Includes contributions by Core Materials to its 401(k) plan for salaried
employees. Core Materials makes contributions to its 401(k) plan in two
ways. Core Materials makes a "matching contribution" which is based on the
employee's salary reduction contribution. Core Materials also makes a
"retirement contribution" which is based on the age and regular earnings of
the employee as of the year the contribution is made. Matching contributions
for the fiscal year ended December 31, 1997 were $938 for Mr. Schmell, $288
for Mr. Barnett and $590 for Mr. Voirol. Retirement contributions during the
fiscal year ended December 31, 1997 were $7,475 for Mr. Schmell, $3,881 for
Mr. Barnett and $5,112 for Mr. Voirol. Matching contributions for the fiscal
year ended December 31, 1998 were $1,912 for Mr. Schmell, $2,165 for Mr.
Barnett, $288 for Mr. Klestinec and $1,606 for Mr. Voirol. Retirement
contributions during the fiscal year ended December 31, 1998 were $8,288 for
Mr. Schmell, $5,288 for Mr. Barnett, $5,606 for Mr. Klestinec and $5,252 for
Mr. Voirol.
9
<PAGE> 13
The following table sets forth information with respect to stock options
granted during the fiscal year ended December 31, 1998 to the executive officers
named in the Summary Compensation Table. In accordance with Securities and
Exchange Commission rules, the hypothetical realizable values for each option
grant are shown based on the compound annual rates of stock price appreciation
of 5% and 10% from the grant date to the expiration date. The assumed rates of
appreciation are prescribed by the Securities and Exchange Commission and are
for illustration purposes only. The assumed rates of appreciation are not
intended to predict future stock prices, which will depend upon market
conditions and the future performance and prospects of Core Materials.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE
% OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ---------------------------- -------------- ------------ ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Kenneth M. Schmell.......... -- -- -- -- -- --
Kevin L. Barnett............ -- -- -- -- -- --
Stephen J. Klestinec(1)..... 100,000 23.1% 5.13 5/28/08 322,623 817,590
100,000 23.1% 3.50 10/21/08 220,113 557,810
Gerald L. Voirol............ -- -- -- -- -- --
</TABLE>
- ---------------
(1) On May 28, 1998, Mr. Klestinec was granted an option to purchase 100,000
shares at an exercise price of $5.13 per share, representing the fair market
value of the shares on the date of grant. The option vested in ten
installments, 9,500 shares on May 28 of each year from 1999 to 2007 and
14,500 shares on November 28, 2008. On October 21, 1998, Mr. Klestinec was
granted an additional option at an exercise price of $3.50 per share which
exceeded the fair market value of Core Materials common stock on that date.
The option granted on May 28, 1998 was forfeited as a condition of the
October 21, 1998 grant. Mr. Klestinec's October 21, 1998 option vests in ten
installments, 9500 shares vest on October 21, of each year from 1999 to 2007
and 14,500 shares vest on April 21, 2008. The option expires ten years from
the date of grant.
The following table sets forth information with respect to the exercise of
options by each of the executive officers named in the Summary Compensation
Table during the fiscal year ended December 31, 1998. The table also sets forth
information with respect to all vested (exercisable) and unvested
(unexercisable) options held by each of the executive officers named in the
Summary Compensation Table as of December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END($)(1)
ON VALUE ------------------------------- -------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- ----------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth M. Schmell...... 0 -- 23,000 102,000 17,250 76,500
Kevin L. Barnett(2)..... 80 $35.00 9,500 90,500 7,125 67,875
Stephen J. Klestinec.... 0 -- 0 100,000 0 0
Gerald L. Voirol........ 0 -- 7,500 32,500 5,625 24,375
</TABLE>
- ---------------
(1) "Value of Unexercised In-the-Money Options at Fiscal Year End" is based upon
the fair market value of the shares of common stock of Core Materials on
December 31, 1998 ($3.50) less the exercise price of in-the-money options at
the end of the fiscal year ended December 31, 1998.
(2) Securities acquired on exercise for Mr. Barnett include shares purchased
pursuant to the Core Materials Corporation Employee Stock Purchase Plan.
Value realized represents the difference between the market price of the
shares on the purchase date ($2.94) and the purchase price paid by Mr.
Barnett ($2.50).
10
<PAGE> 14
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The purpose of the compensation program of Core Materials is to attract and
retain qualified executive officers by providing a total compensation package
which is competitive with comparable corporations and to also provide incentives
to create short-term and long-term improvements in the performance of Core
Materials.
The compensation philosophy of Core Materials is based on the belief that,
- Core Materials must attract and retain qualified individuals and motivate
and reward those individuals for performance;
- a substantial portion of an executive's compensation should depend upon
the performance of Core Materials; and
- incentives should exist which align the interests of the executives with
those of the stockholders of Core Materials and which create long-term
stockholder value.
Following this philosophy, Core Materials has developed a compensation
program for its executives which includes the following components:
BASE SALARY
Core Materials has established base salaries for its executive officers
based upon the experience and capabilities of the executives, as determined in
the subjective judgment of the Board of Directors, and the salaries of
comparable companies.
BONUS/PROFIT SHARING
The Board of Directors has established a bonus/profit sharing program for
the executives and other employees. This program is designed to align the
interests of such individuals with those of the stockholders of Core Materials
by directly tying profit sharing payments to the performance of Core Materials
for the year. This program creates a profit sharing pool for the executives and
other employees based upon percentages of the earnings before taxes of Core
Materials for the year above pre-established thresholds. The thresholds are
established annually by the Board of Directors and are intended to begin
creating a profit sharing pool only after earnings before taxes exceeds a
reasonable level.
STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors grants stock options under the Core Materials
Corporation Long-Term Equity Incentive Plan to executives and salaried employees
which are intended to align the long-term interests of these individuals with
the interests of the stockholders of Core Materials. The Board of Directors
determines the options awarded to the executive officers based upon the
subjective judgment and experience of the directors in compensating executive
officers. Options for the executive officers are generally granted at or above
fair market value and are subject to a ten year vesting schedule. Mr. Klestinec,
Vice President, Sales and Marketing, was the only executive officer to receive a
grant of a stock option during 1998.
In addition, to the Long-Term Equity Incentive Plan, Core Materials also
maintains an Employee Stock Purchase Plan. All eligible employees, including
executive officers, may purchase shares of common stock through payroll
deductions at a price equal to 85% of the fair market value of the common stock.
BASIS FOR CHIEF OPERATING OFFICER'S COMPENSATION
The Board of Directors established compensation for Mr. Schmell for 1998 in
accordance with the information discussed above.
STOCK OPTION REPRICING
On October 21, 1998, the Board of Directors approved a repricing of options
that had been granted to employees of Core Materials at prices ranging up to
$5.13 per share. Due to a decline in the fair market value of
11
<PAGE> 15
the common stock of Core Materials, the Board of Directors concluded that the
previously granted options did not provide a proper incentive to the employees
of Core Materials. Accordingly, the Board of Directors approved an action which
allowed certain employees who had been granted options at prices equaling or
exceeding $3.69 per share to elect to forfeit such options in exchange for a new
option granted at an exercise price of $3.50 per share. The Board of Directors
approved an effective date for the grant of options of October 21, 1998. The
fair market value of the common stock of Core Materials on October 21, 1998 was
$2.88 per share.
Mr. Klestinec, the current Vice President, Sales and Marketing of Core
Materials, elected to forfeit the option that Core Materials originally had
granted him on May 28, 1998, pursuant to the foregoing described stock option
repricing. The following table sets forth certain information respecting the
options granted to Mr. Klestinec on May 28, 1998 and October 21, 1998. Mr.
Klestinec was the only executive officer of Core Materials to have an option
repriced, as described above.
TEN YEAR OPTION REPRICING
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF SECURITIES MARKET PRICE OF EXERCISE NEW ORIGINAL OPTION
UNDERLYING STOCK AT TIME PRICE AT TIME EXERCISE TERM REMAINING
NAME DATE OPTIONS REPRICED OF REPRICING OF REPRICING PRICE AT DATE OF REPRICING
---- ---- -------------------- --------------- ------------- -------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Stephen J. Klestinec, 10/21/98 100,000 $2.88(1) $5.13 $3.50 Expired 10/28/08
Vice President,
Sales and Marketing
</TABLE>
- ---------------
(1) Represents the fair market value of the common stock on October 21, 1998.
Submitted by the Board of Directors,
James F. Crowley
Ralph O. Hellmold
Thomas M. Hough
Malcolm M. Prine
James L. Simonton
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Core Materials did not have a Compensation Committee during the fiscal year
ended December 31, 1998. Accordingly, the Board of Directors made all
compensation decisions. Core Materials has entered into the following
compensation arrangements with members of its Board of Directors:
RELATIONSHIP WITH MR. HELLMOLD
RYMAC Mortgage Investment Corporation was a Maryland corporation that
merged with Core Materials on December 31, 1996. The merger took place in
connection with the acquisition by Core Materials of the Columbus Plastics
operation of Navistar International Transportation Corp. Additional information
on the merger of RYMAC into Core Materials and the acquisition of Columbus
Plastics is provided below under the heading "Certain Relationships and Related
Transactions."
RYMAC entered into a letter agreement dated as of November 1, 1995, as
amended on April 10, 1996 and July 18, 1996, with Hellmold Associates, Inc., an
investment banking boutique. Mr. Hellmold is the founder and President of
Hellmold Associates, and is also a current director of Core Materials and
nominee for director of Core Materials. The letter agreement provided that
Hellmold Associates would assist RYMAC in identifying and contacting potential
acquisition candidates and in structuring and negotiating a strategic
acquisition. Hellmold Associates also was engaged by Navistar International
Transportation Corp. to assist it in selling its Columbus Plastics operation.
In 1996, Hellmold Associates identified Columbus Plastics as a potential
acquisition candidate for RYMAC. Upon the closing of the acquisition of Columbus
Plastics, Core Materials paid Hellmold Associates $688,305 in
12
<PAGE> 16
advisory fees. In 1997, Hellmold Associates also received $30,075 in additional
compensation, as a result of the increase in the purchase price paid to Navistar
which reflected an increase in the net tangible assets of Columbus Plastics as
of the December 31, 1996 acquisition date. In 1998, Hellmold Associates received
$9,808 as a result of an increase in the purchase price paid Navistar based upon
the earnings of Core Materials for 1997. Hellmold Associates may receive
additional compensation in the future as a result of further post-closing
adjustments to the purchase price of Columbus Plastics or as a result of future
services provided to Core Materials.
RELATIONSHIP WITH MR. PRINE
Mr. Prine is the Chairman of the Board of Core Materials. Core Materials
compensates Mr. Prine as a consultant for special services and advice that he
provides to Core Materials at a rate of $7,500 per month. Mr. Prine received a
total of $90,000 in cash compensation for such services during each of the years
ended December 31, 1998 and December 31, 1997. Mr. Prine also received $15,000
in 1997 for consulting services rendered in 1996.
In addition, Mr. Prine was paid $125,000 in 1997 for consulting services
that he rendered in connection with the merger of RYMAC and Core Materials and
the acquisition of Columbus Plastics.
Finally, Mr. Prine was granted a stock option to purchase 70,000 shares on
February 4, 1998, as consideration for his services to Core Materials. The
option vests in increments of 20% over a five-year period and expires on
February 4, 2008. The option was granted at an exercise price of $3.97 per
share, representing the fair market value on the date of grant.
RELATIONSHIPS WITH MR. HOUGH AND MR. SIMONTON
Mr. Hough and Mr. Simonton are officers of Navistar International
Transportation Corp. and members of the Board of Directors of Core Materials.
Sales to Navistar represented approximately 79% of the total revenues of Core
Materials for the fiscal year ended December 31, 1998. Navistar is also a 44%
shareholder in Core Materials.
13
<PAGE> 17
PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total returns
on (i) the common shares of Core Materials, (ii) the S & P Small Cap 600 Index
and (iii) the S & P Trucks & Parts Index for the two-year period ended December
31, 1998. Core Materials did not acquire the Columbus Plastics operation of
Navistar International Transportation Corp. until December 31, 1996, nor did it
assume its current business operations until January 1, 1997. Accordingly,
information is not provided for years ended prior to the year ended December 31,
1996. The stock price performance shown on the graph is not necessarily
indicative of future price performance.
COMPARISON OF 2 YEAR CUMULATIVE TOTAL RETURN*
AMONG CORE MATERIALS CORPORATION, THE S&P SMALLCAP 600 INDEX
AND THE S&P TRUCKS & PARTS INDEX
[GRAPH]
<TABLE>
<CAPTION>
CORE MATERIALS CORPORATION S&P CORPORATION S&P TRUCKS & PARTS
-------------------------- --------------- ------------------
<S> <C> <C> <C>
'12/96' 100.00 100.00 100.00
'12/97' 164.00 126.00 165.00
'12/98' 156.00 129.00 136.00
</TABLE>
* $100 INVESTED ON 12/31/96 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
14
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH NAVISTAR
On October 8, 1996, RYMAC Mortgage Investment Corporation, a Maryland
corporation, formed Core Materials as a wholly-owned subsidiary under the laws
of the State of Delaware. RYMAC incorporated Core Materials in order to acquire
substantially all of the assets of the Columbus Plastics operating unit of
Navistar International Transportation Corp.
RYMAC had entered into an asset purchase agreement with Navistar on
September 12, 1996. The asset purchase agreement provided for the acquisition of
Columbus Plastics. The obligation of Navistar to consummate the acquisition,
however, was conditioned upon the reincorporation of RYMAC in the State of
Delaware. Accordingly, RYMAC formed Core Materials on October 8, 1996, as a
wholly-owned subsidiary under the laws of the State of Delaware and subsequently
merged into Core Materials on December 31, 1996. Core Materials was the
surviving corporation in the merger with each outstanding share of RYMAC common
stock being converted into the right to receive one share of the common stock of
Core Materials.
Pursuant to the terms of the asset purchase agreement with Navistar, Core
Materials acquired substantially all of the assets and liabilities of Columbus
Plastics on December 31, 1996. As consideration, Navistar received a secured
note in the principal amount of $25,504,000. Navistar also received 4,264,000
shares of newly issued common stock of Core Materials, representing
approximately 45% of the total number of shares of common stock issued and
outstanding at the time of the acquisition. The principal amount of the secured
note and the number of shares of common stock received by Navistar were subject
to adjustment pursuant to the terms of the asset purchase agreement. Effective
December 31, 1996, the amount of the secured note was increased to $29,514,000
in order to reflect an increase in the "net tangible assets" of Columbus
Plastics as of the December 31, 1996 acquisition date. In 1997, as a result of a
review of the closing balance sheet and all purchase price adjustments, the
secured note amount was reduced by $1,629,000 to reflect an amendment to the
closing balance sheet as of the acquisition date. In addition, Navistar will
receive future consideration in the form of an increase in the principal amount
of the secured note if Core Materials achieves earnings results above specified
levels during the period 1997 through 1999. Should there be additional future
consideration, it will be accounted for by increasing the amount of the secured
note, and by reducing the amount of Core Materials' retained earnings. Based on
Core Materials' earnings for the years ended December 31, 1998 and 1997, the
secured note was increased by $4,098,000 and $2,937,000, respectively.
Navistar's acquisition of common stock of Core Materials made it the
largest stockholder of Core Materials. The certificate of incorporation of Core
Materials protects this position by limiting the possibility of a change in
ownership or control. For instance, the certificate of incorporation requires a
super-majority vote to remove directors or to approve certain extraordinary
corporate transactions, including mergers and acquisitions. The certificate of
incorporation also restricts transfers of securities which could result in a
change of ownership of a specified percentage in Core Materials. This
restrictive transfer provision is discussed below under the heading "Limitation
on Ownership."
Navistar's status as the largest stockholder of Core Materials has allowed
Navistar in the past, and will allow Navistar at the annual meeting, to
influence the composition of the Board of Directors. Core Materials anticipates
that the stockholders will elect Mr. Hough and Mr. Simonton, currently officers
of Navistar, as directors of Core Materials at the annual meeting.
In addition to being the largest stockholder of Core Materials, Navistar is
also a significant customer of Core Materials with sales to Navistar
representing approximately 79% of total revenues of Core Materials during the
fiscal year ended December 31, 1998. Core Materials has a comprehensive supply
agreement with Navistar, pursuant to which Core Materials sells fiberglass
reinforced parts to Navistar. Additionally, Core Materials and Navistar had a
transitional services agreement, under which Navistar provided accounting,
payroll, human resources and office support services to Core Materials during
1998 and procured insurance on behalf of Core Materials. The total cost to Core
Materials for these services and support during the fiscal year ended December
31, 1998 was approximately $13,000. Finally, Core Materials and Navistar entered
into a registration rights agreement at the time of the merger and acquisition
under which Core Materials granted to Navistar
15
<PAGE> 19
demand and piggy-back rights with respect to the registration for sale under the
Securities Act of 1933 of the shares of common stock received pursuant to the
asset purchase agreement.
OTHER MATERIAL RELATIONSHIPS
Core Materials has entered into material arrangements with members of its
Board of Directors which arrangements are discussed above under the heading
"Compensation Committee Interlocks and Insider Participation."
LIMITATION ON OWNERSHIP
The certificate of incorporation of Core Materials contains a prohibited
transfer provision which was designed at the time of the merger and acquisition
to help assure the continued availability of Core Materials' substantial net
operating losses by seeking to prevent an ownership change in Core Materials.
The prohibited transfer provision prohibits a transfer of stock of Core
Materials if the transfer will cause the transferee to hold a prohibited
ownership percentage or if the transferee's ownership percentage already exceeds
the prohibited ownership percentage. The prohibited transfer provision defines
"stock" as including all classes of stock, options to purchase stock or any
other interest in Core Materials that could be treated as stock. A prohibited
ownership percentage generally means direct and indirect ownership of 4.5% or
more of the stock or any other percentage that would cause a transferee to be
considered a five percent stockholder under the federal income tax rules
referenced in the certificate of incorporation.
The prohibited transfer provision did not apply to the issuance of stock to
Navistar pursuant to the asset purchase agreement and will not restrict certain
transfers that are made in compliance with exceptions set forth in the
prohibited transfer provision.
16
<PAGE> 20
PROPOSAL NO. 1
ELECTION OF DIRECTORS
COMPOSITION OF THE BOARD OF DIRECTORS
The Board of Directors currently consists of five members. At the annual
meeting, the stockholders will elect five directors to hold office until the
election and qualification of their successors at the next annual meeting of
stockholders or until their earlier resignation, death, disqualification or
removal from office.
The intention of the proxies is to vote the shares of common stock they
represent for the election of James F. Crowley, Ralph O. Hellmold, Thomas M.
Hough, Malcolm M. Prine and James L. Simonton, unless the proxy is marked to
indicate that such authorization is expressly withheld. Each of the nominees is
currently a member of the Board of Directors. All of the nominees have stated
their willingness to serve and Core Materials is not aware of any reason that
would cause any of the nominees to be unavailable to serve as a director should
they be elected at the annual meeting. If any of the nominees should become
unavailable for election, the proxies may exercise discretionary authority to
vote for a substitute nominee proposed by the Board of Directors. Information
with respect to the background and experience of each of the five nominees is
set forth above under the heading "Directors and Executive Officers of Core
Materials."
Under Delaware law and the bylaws of Core Materials, the stockholders will
elect as directors the five nominees receiving the greatest number of votes.
Core Materials will count shares of common stock as to which voting authority is
withheld for quorum purposes but will not count those shares toward the election
of directors or toward the election of individual nominees specified in the form
of proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS.
CROWLEY, HELLMOLD, HOUGH, PRINE AND SIMONTON.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Deloitte & Touche LLP to
audit the financial statements of Core Materials for the fiscal year ending
December 31, 1999. Core Materials expects a representative of Deloitte & Touche
LLP to attend the annual meeting. Core Materials will provide the representative
with an opportunity to make a statement if he or she desires to do so. Core
Materials expects that the representative will be available to respond to
appropriate questions.
Core Materials is presenting the appointment of auditors to the
stockholders for ratification at the annual meeting. While ratification by
stockholders of this appointment is not required by law or the certificate of
incorporation or bylaws of Core Materials, management believes that such
ratification is desirable. In the event this appointment is not ratified by a
majority vote of stockholders, the Board of Directors will consider that fact
when it appoints independent certified public accountants for the next fiscal
year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF DELOITTE & TOUCHE LLP.
17
<PAGE> 21
OTHER MATTERS
The management of Core Materials and the Board of Directors of Core
Materials know of no matters to be brought before the annual meeting other than
as set forth above. If, however, any other matters are properly presented to the
stockholders for action, it is the intention of the persons named in the proxy
to vote at their discretion on all matters on which the shares of common stock
represented by such proxies are entitled to vote.
BY ORDER OF THE BOARD OF DIRECTORS
Malcolm M. Prine
Chairman of the Board
Dated: April 22, 1999
18
<PAGE> 22
Appendix I
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF CORE MATERIALS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- MAY 18, 1999
The undersigned hereby appoints Kenneth M. Schmell and Kevin L. Barnett,
and each of them, as proxies for the undersigned, with full power of
substitution, to attend the Annual Meeting of Stockholders of Core Materials
Corporation to be held at Holiday Inn Columbus-West, 2350 Westbelt Drive,
Columbus, Ohio 43228, on May 18, 1999, at 9:00 a.m. Eastern Standard Time, and
any adjournments or postponements of the Annual Meeting, and to vote, as
designated below, all the shares of common stock of Core Materials Corporation
held of record by the undersigned at the close of business on April 2, 1999,
with all the powers the undersigned would possess if he or she were personally
present at the Annual Meeting.
Please specify your choice by clearly marking the appropriate box. Unless
otherwise specified, this proxy will be voted "FOR" Proposals 1, 2 and 3.
1. Election of Directors
<TABLE>
<S> <C> <C>
[ ] FOR NOMINEES*: (1) James F. Crowley [ ] WITHHOLD AUTHORITY TO
(2) Ralph O. Hellmold VOTE FOR ALL NOMINEES
(3) Thomas M. Hough
(4) Malcolm M. Prine
(5) James L. Simonton
</TABLE>
* Instruction: To withhold authority to vote for (any) individual
nominee(s), indicate the name(s) of the nominee(s) in the following space:
---------------------------------------------------------------------------
2. Ratification of Appointment of Independent Certified Public Accountants,
Deloitte & Touche LLP
[ ] FOR Ratification [ ] AGAINST Ratification [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any postponements
or adjournments of the Annual Meeting.
(Continued, and to be signed, on other side)
<PAGE> 23
(Continued from other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CORE
MATERIALS CORPORATION. PLEASE FILL IN, DATE, SIGN AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED OR NOT VOTED AS SPECIFIED. WHERE NO CHOICE IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES
LISTED IN PROPOSAL 1 AS DIRECTORS, "FOR" THE RATIFICATION OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS, DELOITTE & TOUCHE LLP, AND, IN THE DISCRETION OF
THE PROXY OR PROXIES, ON ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE ANNUAL
MEETING OR ANY POSTPONEMENT(S) OR ADJOURNMENT(S) OF THE ANNUAL MEETING.
This proxy must be signed exactly as name(s) appears on this proxy. If
shares are held jointly, each stockholder named should sign.
Please mark, date and sign as your name appears on this proxy and return it
in the enclosed envelope promptly. If acting as executor, administrator,
trustee, guardian, etc., you should so indicate when signing. If the signer is a
corporation, please sign the full corporate name, by duly authorized officer.
Dated:
--------------------------------------
Signature:
--------------------------------------
Signature:
--------------------------------------
